BOSTON (Reuters) - State Street Corp (STT.N) on Wednesday reported a 3.4 percent drop in fourth-quarter revenue and said it lost more than $1 trillion in custody assets to JPMorgan Chase & Co Inc (JPM.N), sending State Street stock tumbling as much as 7.5 percent.

People pass the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City, May 20, 2015. REUTERS/Mike Segar

State Street is the world’s No. 2 custody bank with $28.8 trillion in assets under custody and administration. But the figure could shrink by more than 3 percent after JPMorgan said on Wednesday that it was chosen by BlackRock Inc (BLK.N) to be custodian for more than $1 trillion in assets.

Boston-based State Street, BlackRock’s custodian since 1988, will continue to service the asset manager’s fast-growing iShares ETF assets. Over the years, the two companies have been “joined at the hip,” as one State Street executive put it during a conference call with analysts and investors.

The announcement came as State Street reported total revenue of $2.53 billion in the fourth quarter, a 3.4 percent decline from the year-earlier period.

For JPMorgan, the deal is more of a feather in its cap than a windfall to its bottom line. The deal boosts JPMorgan’s assets under custody, which it pegged at $20.5 trillion at the end of December, by about 5 percent.

The new business is expected to add annual revenue on the order of tens of millions of dollars and be included in the company’s securities services revenue, which last year amounted to $3.6 billion. JPMorgan’s total reported revenue for the entire company was $95.7 billion in 2016 and its net income was $24.7 billion.

Still, the deal is the kind of prize sought by Daniel Pinto, JPMorgan’s chief executive officer for corporate and investment banking.

Pinto, speaking to investors in February, named custody and fund services as one of his most important business lines and a focus of management attention “with technology being at the core of it.”

Executives at State Street, meanwhile, said on a conference call that the loss of BlackRock assets is not part of a broader trend. The bank said it won $1.4 trillion in new asset servicing commitments in 2016.

Still, the developments unsettled investors. State Street shares tumbled to $74.45 at the opening bell, before recovering some of the lost ground, rising to $77.43.

Reporting by Tim McLaughlin in Boston and David Henry in New York; Editing by Chizu Nomiyama